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In fiscal year 2005, the Department of Agriculture's (USDA) Food Stamp Program served over 25 million individuals per month, on average, providing over $28 billion in benefits for the year. To reduce the administrative burden on state agencies, current food stamp regulations allow households that receive or are authorized to receive Temporary Assistance for Needy Families (TANF) noncash services to obtain automatic eligibility for food stamps, known as categorical eligibility. TANF noncash services include any TANF noncash or in-kind benefits, such as child care and transportation aid. Under categorical eligibility, households must apply to determine if they will receive any food stamp benefits. The application process for categorically eligible food stamps is the same as for regular food stamps, except that caseworkers apply the different income and asset limits for the TANF noncash services, or those imposed by the state. Under current food stamp regulations, states must confer categorical eligibility for individuals receiving, or authorized to receive, TANF noncash services that are funded with more than 50 percent federal or state maintenance of effort (MOE) funds and serve certain TANF purposes. In addition, states have the option to confer categorical eligibility using TANF noncash services funded with less than 50 percent federal or state funds. States are required to determine that individuals are eligible for a TANF noncash service and notify them of this determination before conferring categorical eligibility, but individuals are not required to receive these services. USDA's Food and Nutrition Service (FNS), which administers the Food Stamp Program, is not required to track how states are implementing categorical eligibility, but it does sporadically collect information from the states on the nature and funding of the services used to confer categorical eligibility. The Administration has proposed eliminating TANF noncash categorical eligibility for food stamps, and the Congressional Budget Office has estimated that about 280,000 participants would no longer be eligible for food stamps in fiscal year 2008 if the proposal is implemented. Also, because food stamp eligibility confers automatic eligibility for other nutrition programs, such as the National School Lunch Program, there is some question as to how the elimination of TANF noncash categorical eligibility would affect the recipients of other nutrition programs. In this context, Congress asked us to review the implementation of TANF noncash categorical eligibility and examine the potential effect of its proposed elimination. Specifically, Congress asked us to answer the following questions: (1) How have states implemented categorical eligibility for TANF noncash recipients? (2) How do the income and asset levels of TANF noncash food stamp recipients compare to those of TANF cash food stamp recipients? (3) What is the potential effect of eliminating TANF noncash categorical eligibility on Food Stamp Program participation, administration, and state administrative costs?

In summary, we reported the following findings: The 29 states that confer TANF noncash categorical eligibility use a variety of noncash services to qualify participants for food stamp benefits under categorical eligibility, such as services that provide employment support, family support, and self-sufficiency support. Some states use brochures or information referral services that could allow for a large segment of the state's food stamp population to be categorically eligible, while some states use services designed to serve more narrowly defined populations. Six states may not be following program regulations, however, which require them to use certain federally or state-funded noncash services to confer categorical eligibility. Additionally, some states reported that they do not specifically determine if an individual needs a certain TANF noncash service before conferring food stamp eligibility. TANF noncash categorically eligible food stamp households appear to have slightly higher incomes as compared to those of TANF cash categorically eligible households. We do not have asset data for the TANF cash categorically eligible households, so we cannot compare the assets of TANF cash and TANF noncash households. Our analysis showed that a vast majority of TANF noncash households may remain eligible for food stamps without TANF noncash categorical eligibility because their income and/or asset levels are within the regular food stamp limits. Other households may lose eligibility for food stamps because their income and/or asset levels are too high. However, the degree to which participation may decrease varies across the states. In addition, our analysis showed that few noncash households may lose eligibility for other nutrition programs because their incomes are sufficiently low to qualify them for these programs. Similarly, many of the states' food stamp officials believed eliminating noncash categorical eligibility would decrease participation in food stamps and other nutrition programs. Many of the states' food stamp officials also believed that the proposed elimination of noncash categorical eligibility would increase the Food Stamp Program administrative workload and state administrative costs, for example, due to the need to verify assets, change data systems, and train staff.

Recommendation for Executive Action

Status: Closed - Implemented

Comments: In September 2009, Food and Nutrition Service (FNS) issued a memo, including a handout and flow chart, to provide guidance on the complex regulations that define and regulate categorical eligibility and to encourage states to adopt categorical eligibility policies that would expand eligibility for SNAP. FNS collects information on their implementation of categorical eligibility through its annual State Options report, and tracks states that have implemented "broad-based," categorical eligibility or "narrow-based" categorical eligibility. According to FNS, many of the states we identified at the time of our 2007 report that were potentially not following categorical eligibility rules have adopted broad-based categorical eligibility.

Recommendation: FNS should provide guidance and technical assistance to states clarifying which TANF noncash services states must use to confer categorical eligibility for food stamps and monitor states' compliance with the categorical eligibility requirements.

Agency Affected: Department of Agriculture: Office of the Secretary: Food, Nutrition and Consumer Services: Food and Nutrition Service